Can technology breathe new life into the Midwest’s old iron?

December 8, 2011

The industrial Midwest might not be the industrial Midwest if it weren’t for the iron-rich regions of northern Minnesota and Michigan. These iron ranges have long supplied domestic steelmakers, depleting the highest quality ore along the way. Now, a plant in Minnesota is testing a process to dramatically upgrade the low-grade ore that remains.

To understand why this matters, keep in mind how steelmaking has changed. The old recipe for steel calls for iron ore, coke and a blast furnace. But now, more than half of American steel is made in electric arc furnaces, which use electricity to melt scrap steel into new steel.

“We’re the only facility in the world that does what we do, so we’re pioneers of sorts,” says plant manager Jeff Hansen.

This plant cost more than 300 million dollars and took years of development with Kobe Steel of Japan. All to produce a tiny nugget of iron.

“It’s very dense, it’s very heavy,” Hansen says. “If you were to look at it you’d say it very closely resembles a Junior Mint.”

A Junior Mint that’s 96 percent iron. Remember, this started as low-grade ore. That ore is usually upgraded into pellets that are about 65 percent iron. The pellets work in traditional mills but don’t serve the growing electric market.

Jeff Hansen’s face glows orange as he peers into the plant’s vast furnace. He says it’s the largest of its kind in the world.

“We bring the temperatures up to 2400, 2500, upwards of 2800 degrees Fahrenheit,” he says. “As you look inside the furnace, you’re gonna see the pellets giving off volatiles and actually giving off some fire.”

These pellets are about to be transformed into almost pure iron

Pellets float by almost like lava, on their way to becoming pure metallic iron. Mesabi Nugget produced about 200,000 tons of nuggets over its first two years. The goal is 500,000 tons a year.

John Anton is a steel analyst with IHS Global Insight. He says Steel Dynamics isn’t the only company that wants to supply its own raw materials and buffer itself from the market.

“Raw material costs – and iron ore and scrap are key here – used to be very steady,” he says. “In the past seven or eight years they have become incredibly volatile. They’re one of the most volatile things in the entire commodities, more volatile than oil.”